Question

A middle-aged widowed customer has an investment objective of stable income and would also like to receive occasional "extra" income to help pay unexpected bills. What type of preferred stock would be the best recommendation?

Answer 1

Answer: Participating preferred

Explanation:

Participating preferred is a stock which pays specific dividends rate to their customers and also receives additional dividends, this is made known Board of Directors and paid by the company, this meets up with the objectives a customers has for investing and having a stable income. It is so known as performance preferred and it gives the holder the benefit of collecting extra dividends.